A Federal Reserve move to lower interest rates may nudge some developers to resurrect dormant commercial projects that were put on hold a few years back when rates first started rising.

No one is predicting a building boom of new multifamily, industrial and other commercial facilities in New Hampshire after the Federal Reserve’s cut in its benchmark short-term rate – still anticipated as of press time, and potentially the start of a loosening of monetary policy.

But executives in the local finance and construction industries say they’re seeing and hearing some increased behind-the-scenes activity as developers dust off old plans, adjust budgets and confirm financial commitments as they prepare to possibly proceed with projects.

“There are no shovels in the ground yet,” said Ryan Audley, president of R.S. Audley Inc., a Bow-based civil construction company that focuses on public highway and private commercial projects. “But we’re seeing some of those [previously put on-hold] projects starting up again. We’ve seen activity picking up a bit in anticipation of rate cuts.”

Little Immediate Impact

Audley, the past president of the Associated General Contractors of New Hampshire, said he’s specifically hearing about multifamily housing and industrial projects being resurrected by a few developers. Those projects already have the necessary zoning and building permits to proceed, he stressed.

Patrick Kelly, president of Berkeley Building Co., agreed that some developers are beginning to talk of resurrecting previously delayed projects – but it’s mostly just talk at this point.

Many developers are also waiting to see how the presidential election turns out, not just Fed action on the interest-rate front, before proceeding with any plans, said Kelly, whose firm operates in both Massachusetts and New Hampshire.

“Every little bit helps,” said Kelly of interest rate cuts this fall. “But cutting rates by a quarter or half a point isn’t such a big deal. I don’t see a dramatic change. Some projects will take off, but not a lot.”

A major obstacle holding back developers from aggressively proceeding with plans: high construction costs in general.

The price of construction materials, equipment and labor skyrocketed during and immediately following the pandemic.

Those steep price increases have recently moderated over the past year, but prices are still on an upward trajectory, noted Kelly.

“The numbers are not penciling out for many” projects, he said.

Multifamily a Likely Winner

Robert Cashman, CEO of Metro Credit Union, which does business in both Massachusetts and southern New Hampshire, said the Fed rate cut will mostly help the consumer loan market, such as for auto loans and credit cards, and the commercial loan market.

But it probably won’t help the residential mortgage market much because the housing sector’s ultimate problem is lack of inventory for sale, not interest rate levels.

Yet that housing shortage does make multifamily projects in New Hampshire and elsewhere attractive to investors, he said.

“We’re getting calls from [developers] interested in pursuing multifamily,” he said. “The pipeline is robust.”

Cashman said any ground-up multifamily developments that his credit union might get involved with across its footprint would probably be in the 10- to 15-units range.

In New Hampshire specifically, Metro Credit Union is fielding calls from investors mostly interested in developing parcels for housing and small strip malls, he said.

Ross Bartlett, executive vice president and chief operating officer at the Bank of New Hampshire, agreed that if any commercial construction sector benefits from a Fed rate cut, it will probably be multifamily housing due to the tremendous demand for more homes in New Hampshire.

“Certainly multifamily projects will be attractive to investors,” he said. “I see continued opportunities for multi-family developments.”

But Bartlett stressed the size and magnitude of commercial construction won’t be known for months after a Fed rate cut.

“I’m sure people are talking about restarting projects,” he said. “But we haven’t seen a lot of activity yet.”

Don’t Sleep on Industrial

Besides some developers’ interest in pursuing multifamily housing projects in New Hampshire, some say the industrial subsector could also benefit from rate cuts.

The industrial subsector, specifically warehouses, boomed during the lockdowns of the pandemic era, when consumers increasingly ordered all sorts of products via Amazon and other online retailers.

As a result, demand for giant storage and distribution centers skyrocketed across New Hampshire and the nation. That demand has cooled off of late, but there’s still a need for additional small- and medium-sized warehouse space in New Hampshire, real estate and banking executives say.

One commercial subsector not mentioned by sources interviewed for this story: the office market.

Due to the rise of remote working, the demand for office space has plummeted in some areas of New Hampshire – and no one interviewed by The Registry Review said they’ve seen or heard of new plans to construct significantly more office space.

The bottom line in general for commercial construction: Any Fed rates cuts will help make projects more affordable.

“In the near term, a rate cut is inarguably going to be a net plus,” said Audley. “There are still major concerns about construction costs in general. But rate cuts will help.”